Oct. 30, 2023
To Whom It May Concern: I am writing to express concerns about the proposed amendments to 17 CFR 275.206(4)-2 regarding the safeguarding of advisory client assets. While protecting clients is an important goal, this rule as written could stifle innovation in the emerging cryptocurrency industry. Specifically, the required business continuity and transition plans contradict the ethos of decentralization in cryptocurrency networks. The premise of cryptocurrency is that no single entity controls the network. Yet this rule assumes advisory firms must have robust plans to account for client assets in the event of a significant disruption. For truly decentralized cryptocurrencies and networks, it simply isn't feasible for an advisory firm to guarantee custody and access to client assets if the firm fails. That is inherent to the decentralized technology. Rather than impose centralized requirements, a better approach would be to educate investors on the risks of decentralized systems. Cryptocurrency represents an exciting new paradigm in finance. However, its core innovations around decentralization do not fit neatly into existing regulations. I urge the SEC to reconsider this proposed rule and take care not to inadvertently restrict beneficial innovations in the cryptocurrency space. I appreciate you reopening the comment period to allow for additional discussion and input on this complex issue. Please feel free to contact me if I can provide any additional perspective as the SEC moves forward.